Spiking Gas Prices: Sometimes A Conspiracy!

This is the part where some incredibly intelligent economist usually tells you that…

while it may look suspicious the way gas prices rise in lockstep, without any apparent logic except relieving you of your hard-earned pay, in fact, it does make perfect sense to anyone who’s spent half their life in graduate school studying the highly evolved calculus of taxes, rack rate fluctuation and Middle Eastern politics. So with that out of the way — what if they’re wrong? What if it really is a conspiracy?

As prices in Vancouver hit $1.50 a litre, it’s certainly tempting to go down that road. And — in fact — history shows that price-fixing at the pumps has happened in Canada. Recently. But there’s a big difference between the legal definition of price-fixing (the kind that can get a vendor jail time) and what a cash-strapped customer might consider the crossing of a moral line in a bid to keep up with competitors.

If you are a conspiracy theorist on the gas price front, you’re not alone. According to the results of an Ipsos Public Affairs survey done last October as part of a study on retail fuel pricing in Ontario. The “vast majority” of drivers had negative impressions of the fuel industry. “Nearly 90 per cent felt that the industry manipulates prices for profit (such as during holidays, weekends etc).” The legal basics of price fixing require a finding that two or more competitors have agreed to either fix prices, restrict output or divide or allocate markets or customers-but you drive by 4 to 5 different gas companies same day, same hour and they all have the same price-HELLOOOO anybody home?

The Competition Bureau of Canada says questions about gas price fixing are among those most frequently asked of the agency-wonder why. successful gas price prosecutions the bureau has pursued involving dozens of individuals and corporate entities in Ontario and Quebec. The cases have seen courts levy millions of dollars in fines. And some of the conspirators have been sent to jail. In one investigation, the bureau used wiretaps to intercept more than 220,000 private communications between dozens of people.

Beyond the criminal courts, gas price fixing has also led to class action lawsuits on behalf of cheated consumers-Excellent! It’s so bad that, the manager of a service station leased from Gulf Oil complained, that the company was forcing the price of gasoline too high. The oil giant sought to have him evicted because of the way he responded as follows: He fought back by posting handwritten signs on the top of two gas pumps. They read “Please Help Us Fight High Gas Prices, Please Don’t Buy Our Gas — The Management.” So it’s not your imagination.